Brazil backs away from destructive mega-dams

The country’s shift to renewables and decentralised energy amid struggle to finance large dams in the Amazon offers an alternative way forward for planners in the Himalayas

Christian Poirier, February 21, 2018

In early January, executives of Brazil’s Ministry of Mines and Energy (MME) announced to a national newspaper, O Globo, that the country would cease building large dams on the Amazon’s rivers, news that surprised many.The executives cited the need to “respect the social desire to restrict these projects”. They acknowledged the difficulty of licensing and financing mega-dams following controversial projects, such as Belo Monte, a project on the Xingu River (a tributary of the Amazon) involving Chinese companies. Finally, they indicated that Brazil would pursue new directions to meet its energy needs, emphasising renewable power and decentralised distribution.This news is considered a victory for campaigners who have resisted and fought the construction of Amazon dams, particularly for those communities and organisations on the frontline. To halt a powerful dam-building juggernaut has been taken as a vindication of a decades-long struggle to defend the Amazon and all those who rely upon its irreplaceable ecosystems.For Chinese companies with a growing interest in Brazil’s energy sector there are implications for the viability of future hydro investments.

Policy shift

After China, Brazil is the second-largest producer of hydroelectricity in the world. There are several factors that led to the country’s policy shift. They include the privatisation of the state energy company Electrobras, which was involved in a corruption scandal that undermined public support for new projects of this kind.

When MME executive secretary Paulo Pedrosa mentioned the “social desire” to act, he was referring to the public’s response to the ministry’s original plan for the Amazon rivers, which foresaw building dozens of large dams over the coming years. “We are not willing to make moves that mask their costs and their risks,” said Pedrosa.

In 2010, Amazon Watch joined a coalition of allies — ranging from the grassroots to the global — to fight the Belo Monte dam and its proponents. This coalition’s combined efforts sought not only to stop one emblematic project, but also to challenge a destructive development model and encourage a paradigm shift toward clean, alternative solutions. While ultimately unsuccessful at halting the mega-dam, the São Luiz do Tapajós dam (Belo Monte’s successor) was halted in 2016. The announcement in January seemed to answer the public’s call for accountability and viable energy alternatives.

However, the credibility of the Brazilian government in these matters has been questioned. Last month, Brazil’s national energy agency ANEEL accepted viability studies for the proposed Jatoba dam on the Tapajós River, a large project with major implications for the region’s ecosystems and the wellbeing of the Munduruku indigenous people. This suggests some hydropower projects continue to move forward.

Meanwhile, the government’s ten-year energy plan cites the completion of studies for the São Luiz do Tapajós dam’s energy transmission lines, suggesting it will be back on the agenda in 2028. Indeed, the plan questions the government’s commitment to recognise disputes around the social, environmental, and economic viability of large dams, including violations of the rights of indigenous peoples.

China invests

It is important to note that Brazilian energy planners no longer benefit from the deep pockets of the state development bank (BNDES) which previously provided subsidised loans that covered up to 80% of mega-dam budgets.

Now mired in economic crisis, the Brazilian government is increasingly seeking Chinese investment in infrastructure projects, as in the case of the China Three Gorges (CTG) Corporation’s involvement in the São Manoel Dam on the Teles Pires River. The company’s 33.3% stake in this controversial project should not be seen in isolation, but rather as part of a growing trend of Chinese corporate and financial involvement in Brazil’s development trajectory.

China invested USD 8.5 billion in Brazil in 2017, representing 35% of all foreign investment into Brazil that year. Investment has been concentrated in energy, infrastructure, and agriculture industries. Chinese finance, therefore, has significant and growing influence in Brazil, particularly in commodity sectors, such as soy.

The future

As logistical bottlenecks routinely delay and increase the cost of Brazil’s soy exports from Amazonian ports, infrastructure planners envision corridors including dams, waterways, and railroads that will facilitate commodity exports at great cost to the region’s ecosystems.

With controlling shares in leading Brazilian energy companies, Chinese investors could be positioning themselves to bring new Amazon dam and associated waterway projects to life. Given the aforementioned role of CTG in damming the Teles Pires River, as well as the

Chinese company State Grid’s construction of Belo Monte’s energy transmission lines, there are indications that more such projects are in the pipeline. In the context of rising investments it will be hard for the Brazilian energy ministry to keep its promise to cut damming on the Amazon.

This month’s announcement should be celebrated as a tentative victory, albeit a fragile one that demands vigilance as Brazil continues to weather political and financial instability. With presidential elections scheduled for the end of the year, a new administration could honour or abandon the MME’s proposals.Christian Poirier is programme director at Amazon Watch. This is an edited version of an article originally published by Amazon Watch.